In a letter release this morning, Coty also revealed that Buffett’s Berkshire Hathaway is one source of equity funding. J.P. Morgan is providing financing, too.

Avon flatly rejected Coty last month and then went and named a new CEO, Sherilyn McCoy, who had lost out on the top job at Johnson & Johnson but was considered a star. McCoy’s contract included a lucrative payday were the company to get sold and she lose her job.

The quarter was a big earnings miss, which Avon said was because of investments meant to right the ship. Then, adding to the concerns, credit-rating firms Fitch and Standard & Poor’s slashed Avon’s debt ratings, putting the company on the verge of junk territory. That will complicate Avon’s attempts to right itself, and S&P analyst Jacqueline Hui said “We believe a material operating turnaround over the next year will be difficult.”

Avon says today it “will consider the letter in due course.” Coty’s letter says it was told a strategic review under McCoy needed to happen first, but it and Buffett are only willing to wait until the end of the month.

Comments (1 of 1)

"Avon weakness"? this is news? You don't have to be Warren Buffet or Coty to see the company has failed to innovate. To operate without direction for so prolonged a period, invites suitors, hostile or otherwise and could not have been pulled off without deliberation. The only thing Avon miscalculated is that no other suitor surfaced to drive up the offer. I have no doubt under Coty's direction, and after a good house cleaning, the company will succeed at something else besides just "playing possum"; I only hope the commitment to breast cancer remains.

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